South Dakota Government Blog by Bob Mercer

Monthly Archives: October 2014

The California arbitrator, retired judge Robert Baines, signed the final award Oct. 21. He decided none of the sides — Darley International, which brought the breach of contract case; South Dakota International Business Institute, a subdivision of Northern State University and the Governor’s Office of Economic Development; and Hanul law firm, whose James Park worked for years hand in hand with SDIBI’s Joop Bollen — should get one cent from each other in this dispute over Darley’s attempt to work for Hanul as a subcontractor on SDIBI projects. The arbitrator’s decision landed among South Dakota reporters on Thursday night and Friday morning. The state Board of Regents, who defended SDIBI in the case, decided Friday to release all of the documents in the matter (www.sdbor.edu). If you want to read just the arbitrator’s decision, here it is:

Especially worthwhile are some of the arbitrator’s comments near the end on pages 24 and 25. The bottom line, in his view, was that officials for NSU and the regents should have been paying more attention and they weren’t the most transparent in claiming that SDIBI’s relationship with Hanul wasn’t known. He adds, “The fact that the Hanul law firm apparently kept its dealings with SDIBI verbal is interesting, to say the least.” The Darley situation took place in 2007 and early 2008, just as Bollen was establishing his own private business, SDRC Inc., to handle the State of South Dakota’s involvement in the EB-5 program. In 2009 Bollen would leave the university and go full-time with SDRC Inc. His departure was triggered by the Darley lawsuit and the chill he suddenly felt on campus. Eventually it all led to SDRC Inc. involvement in the Northern Beef project, a series of big grants by then-Gov. Mike Rounds to Northern Beef directly and indirectly, and one of his Cabinet members, Richard Benda, taking a job with SDRC Inc. Benda reportedly committed suicide on Oct. 20, 2013, as state Attorney General Marty Jackley was preparing to prosecute Benda over $550,000 of grant money that was diverted from Northern Beef to SDRC Inc. to evidently pay Benda’s salary for two years. Since then we’ve found out some things about the immigrant investor program known as EB-5 in South Dakota. But it seems we have much more to know.

Doctors and big hospitals have spent more than $2 million fighting against each other over a measure on South Dakota’s Nov. 4 election ballot that would force insurers to accept any legitimate providers of medical care chosen by their patients.

Let’s start with the opponents.

Three major hospital groups, the association that represents them and two insurance groups contributed against Initiated Measure 17. The South Dakota Chamber of Commerce and Industry is serving as the conduit for the opposition money. The campaign-finance report filed by the chamber’s president David Owen shows some $675,000 was spent, largely on advertising.

Together they accumulated $680,600 and spent $675,506.26. The two major expenditures were $623,689.75 for advertising and $41,800 for consulting.

Now let’s look at the side seeking the change. The Patient Choice for South Dakota campaign committee organized in 2013 with Jon Crow of Sioux Falls Specialty Hospital as its chairman and Jack Kaup of Black Hills Surgical Hospital as treasurer.

Since mid-May the yes side raised more than $677,000 but has spent $856,582 and still owes $97,008 to a marketing firm and a law firm. The yes side’s major funding sources of late have been Sioux Falls Specialty Hospital $175,000; Black Hills Surgical Hospital $100,000; Medical Facilities Holding of Sioux Falls $300,000; American Association of Orthopedic Surgeons $30,000, Surgical Management Professionals of Sioux Falls $20,000 and State Medical Association $10,000.

There’s more to the story for the yes side. In the first half of 2014 they raised $235,700 from individual doctors and providers and $92,000 from healthcare organizations. In turn they spent $253,734 between January and mid-May largely on advertising and consulting.

In 2013 the yes side raised $236,125 from healthcare organizations and spent $225,534 on consulting.

Constitutional Amendment Q on the Nov. 4 election ballot would allow Deadwood casinos to offer roulette, craps and keno. I don’t find an opposition group that has filed with the South Dakota Secretary of State (if so, let me know) but I did check the campaign finance report for the supporters organization. Yes On Q, run by Mike Rodman, is in an interesting situation. Its only contributor is the Deadwood Gaming Association, which donated $50,000. The report shows Yes On Q spend $1,397 from its account but owes marketing firm Lawrence & Schiller of Sioux Falls $66,886. Yes On Q needs at least another $20,000 to cover that bill.

People who gamble sometimes hit hot streaks and sometimes hit cold streaks. We don’t know which independent poll recently hit a streak regarding South Dakotans’ opinions about adding keno, craps and roulette at Deadwood casinos. The measure, Constitutional Amendment Q, had strong support in the Survey South Dakota poll for the Aberdeen American News, KOTA TV and KSFY TV. Those results showed 52 percent yes and 29 percent no. During the same period a week ago, the Mason-Dixon poll for the Sioux Falls Argus Leader and KELO TV found an opposite result, showing 39 percent yes and 56 percent no.

The Mason-Dixon poll was a one-time look. Survey South Dakota has been in the field several times this year for the American News, KOTA and KSFY trio. Their results in early October polling on Amendment Q found 49 percent yes and 23 percent no. Their results in early September on Q found 44 percent yes and 28 percent no.

Contrary to published reports elsewhere, a constitutional amendment requires a majority of yes votes in the election and doesn’t require a 60 percent majority. The three Survey South Dakota polls suggest a likelihood that Q will be approved. The Mason-Dixon poll suggests a likelihood Q will fail. This is one of those intriguing situations where you have contradictory polls and their results aren’t close. Survey South Dakota hit a “yes” streak in three consecutive rounds of polling over two months. Mason-Dixon hit a “no” streak in one round of polling. We will know the real streak late Tuesday night when the ballots are counted.

In the past month the guarded talk among some Republicans wasn’t so much about whether former Gov. Mike Rounds would win the U.S. Senate seat up for election this fall, but whether the showing would be weak enough to encourage a challenge to Rounds in a 2020 Republican primary. His improved standing in the recent round of public-opinion surveys seemed to take the air out of the challenges from Democrat Rick Weiland and one of the independent candidates, former Republican U.S. Sen. Larry Pressler. Rounds now looks to be solidly in the low to middle 40s. That would mean a high single-digit or even low double-digit margin of victory for him.

Getting at least 45 percent would keep him out of South Dakota’s political trivia as the U.S. senator with the smallest plurality (I’m told by a historian who prefers anonymity that Republican William McMaster had 44 percent in an eight-man contest in 1924). But Rounds would make a 2020 primary much less inviting if he could reach 50 percent in the Nov. 4 election. That would make him an outright majority winner. Can it happen?

He probably has the best team in place at the county level for getting voters to the polls. There already is an indication that Republicans are doing well with absentee ballots for early voting. Another indicator is that Republican candidates for the other two major offices — governor and U.S. House — are doing extremely well in capturing mid-90s support from Republicans. If Rounds can elevate his support among Republicans to that level, he very likely could break 50 percent when the actual ballots are counted Tuesday night. That would require Rounds shifting voters — Republicans and independents — back from Pressler. The recent polling suggests there already was a movement under way from Pressler to Weiland and Rounds as Democrats and Republicans go home, so to speak, to their base political registration.

Helping Rounds of late have been U.S. Sen. John Thune and a series of sitting Republican U.S. senators campaigning for Rounds in South Dakota. The 2012 Republican candidate for president, Mitt Romney, campaigns for Rounds on Thursday. On Sunday and Monday, Gov. Dennis Daugaard plans to campaign with Rounds (Daugaard was lieutenant governor for Rounds and endorsed Rounds early in this campaign). All those Republican arms around Rounds’ shoulders will only enhance his standing among Republican voters who will see a message that he’s respectable in the Republican establishment and therefore electable to the Senate.

We’ll know in a week, but I wouldn’t be surprised by Rounds 51 percent, Weiland 35 percent, Pressler 11 percent and the remaining few percent going to the other independent, Gordon Howie, a former Republican legislator.

The state Public Utilities Commission meets at midday (11:30 a.m.) today and down the agenda is an item regarding TransCanada’s application for certification of its previously approved permit for the proposed Keystone XL oil pipeline that would cross from Montana into western South Dakota and continue into central Nebraska. The decision facing the PUC today is whether to grant “party status” to a long list of people and organizations who seek to be part of the commission’s future proceedings on the pipeline project. By my count there were approximately 45 applications for party status, including the tribal governments for the Yankton Sioux, the Standing Rock Sioux, the Rosebud Sioux and the Cheyenne River Sioux, as well as Dakota Rural Action, Bold Nebraska, South Dakota Wildlife Federation and Sierra Club. We’ll update this afternoon. The Keystone XL project is a dividing point among many of the candidates for election this fall in South Dakota.

UPDATE: The commission approved all of the people and organizations who applied for status as intervenors and denied Keystone XL’s objections to two dozen, including Bold Nebraska, an organization leading the fight against the pipeline in that state. The commission spent one hour and 45 minutes sifting through the challenges.

Former Gov. Mike Rounds never trailed in a public-opinion survey on the U.S. Senate contest this year, and the Republican nominee’s streak remains intact with the release of results from three more independent polls taken in the past week. The latest, a Mason-Dixon survey conducted for the Sioux Falls Argus Leader and KELO TV, puts Rounds in a clear lead at 42 percent, followed by Democrat Rick Weiland at 33 percent. Independent candidate Larry Pressler, a former Republican U.S. senator, was at 13 percent. Independent candidate Gordon Howie, a former Republican legislator, was at 2 percent. The numbers generally were similar in the NBC and the New York Times polls released during the weekend, with Rounds in the 40s in both.

The Survey South Dakota poll results for the Aberdeen American News, KOTA TV and KSFY TV will be released in the coming hours. They will be important because Survey South Dakota has been in the field the most often among the independent pollsters checking the pulse on the Senate race. The swing back to a larger lead for Rounds mirrors what his campaign had been telling people in the past 10 days. Interesting in this contest is how the race changed so dramatically approximately one month ago, with Rounds slipping to within the margin of error, and how it has changed so dramatically once again in the surveys conducted two weeks before the election. These likely will be the last major polls conducted before the final voting Nov. 4. One key difference for Rounds was that he and surrogates for his campaign began to fight back against Weiland and Pressler, labeling Weiland and Pressler as votes for President Barack Obama’s agenda. The Rounds campaign seems to have built momentum this month with more highway signs going up. This visual display of momentum was one of the small but important keys to his 2002 primary election victory for the Republican nomination for governor. Rounds also has been steadily meeting with groups of voters over meals in small towns, and that personal time adds up, perhaps more than simply saying a candidate has visited every town.

If Rounds holds in the low 40s, he won’t be the first plurality-elected member of Congress from South Dakota, but he might have one of the lowest percentages. We’ll have to dig through South Dakota elections statistics to come up with that perspective.

UPDATE: From David Montgomery’s story in the Argus Leader about the polling results is this nugget:

Rounds is the best-liked of the lot, with 39 percent of voters having a favorable opinion of the former governor and 35 percent a negative opinion. That’s a sharp drop from when Rounds left office; a Mason-Dixon poll in 2010 found 49 percent with a favorable opinion of Rounds and just 18 percent with an unfavorable opinion.

Weiland is liked by 30 percent and disliked by 29 percent, while Pressler is liked by 27 percent and disliked by 26 percent.

Get ready for a flurry of final polling on South Dakota’s contest for a U.S. Senate seat. I expect at least three or four sets of fresh numbers coming out in the final week before the Nov. 4 election. There will be a Survey South Dakota set for the Aberdeen American News, KOTA and KSFY. The Sioux Falls Argus Leader and KELO release their numbers from Mason Dixon on Monday. I expect Nielson Brothers Polling from Sioux Falls will be out with a last look. Word is that Rasmussen Reports had a poll going in recent days. There might yet another out there too. All of it will add up to a wonderful look at what South Dakotans are thinking about the U.S. Senate contest (and several of the other statewide races and three ballot measures). From the group we will get a sense of where things stood as of 14 days or so before the election. From the longer-term projects such as Survey South Dakota and NBP we’ll also get a sense of the trends. What will be interesting — and I’ve never seen research on this, but I’m sure it’s out there — is whether these polling results then affect the voters and the outcome. Would a decline in one candidate’s support lead to further decline or to a resurrection of that candidate? Would a gain in another candidate’s support add to the candidate’s momentum? Would a candidate regaining some strength lead to a sense of “it’s over”? These are important questions, too, in these final days of this odd, odd contest.

The protests by people who move big things for a living — farm implements, houses, manufactured homes — produced a major revision in the state Department of Transportation’s plans for the U.S. 14B / I-29 interchange on the northeast side of Brookings. DOT wanted to install roundabouts on both sides of the 14B bridge over I-29. The goal was to ease traffic congestion in the coming years while DOT rebuilds the main U.S. 14 / I-29 interchange in the busy commercial district. After complaints, state Transportation Secretary Darin Bergquist spent time the past month contacting Brookings-area officials. The result is a revised plan that has local consensus. There will be traffic signals at the U.S. 14B interchange rather than roundabouts. The state Transportation Commission gave the final blessing to the change Thursday. But there are also three conditions to keep in mind. DOT officials said they don’t plan any major work on the U.S. 14B bridge to make it wider; they think the bridge has 30 years of good life remaining. Second, there’s no guarantee that roundabouts won’t be considered again at some future time. Third, a speed study will be conducted along that stretch of truck by-pass to see whether adjustments to slow traffic would be advisable.

Depending on when and how you first read the story Wednesday, you might or might not think the Argus Leader reported that Gov. Mike Rounds in 2010 approved $600,000 of increases in Future Fund grants that were intended to find their way through a third party to the Northern Beef project in Aberdeen. Eventually $550,000 of the extra money did make it to Northern Beef, via a Future Fund grant to the South Dakota Development Corporation. After the public disclosure of the $600,000 of increases months ago, the manager of the Rounds campaign for U.S. Senate, Rob Skjonsberg, said Rounds didn’t approve the increases. That left Richard Benda as the man responsible for the increases. Benda was secretary of tourism and state development for Rounds from 2006 through early 2011. Benda died Oct. 20, 2013, of what was determined to be a self-inflicted shotgun wound to his abdomen. Rounds appeared Tuesday on the ‘100 Eyes’ program run by the Sioux Falls Argus Leader. Reporter David Montgomery subsequently reported two seemingly new facts: Rounds knew Benda was going to work for a Northern Beef investor when Rounds approved a $1 million Future Fund grant that was to go directly to Northern Beef; and Rounds approved the additional $600,000 of extra money in two other Future Fund grants that went to South Dakota Development Corporation and then were to go to Northern Beef. If Rounds approved the $600,000, that contradicted what his campaign manager had said months earlier. Turns out the story was half-right: Rounds did know Benda was taking a job with a Northern Beef investor, but Rounds didn’t approve the $600,000 of increases. The $600,000 is significant because it is a piece in a broader scheme. Benda, days after his time with state government ended in January 2011, hand-delivered the $1 million check to Northern Beef. In turn Northern Beef diverted $550,000 from the $1 million and put the $550,000 into an escrow account with SDRC Inc. to pay for a loan monitor on the Northern Beef project. The loan monitor was Benda. Benda had signed a state contract in his role as a Rounds cabinet secretary with SDRC Inc. in 2009 to manage the EB-5 immigrant investor program for South Dakota. SDRC Inc. raised tens of millions of dollars in loan pools from South Korean and Chinese investors seeking favored visa treatment under the federal EB-5 program. One of those projects was Northern Beef. Where the extra $600,000 came into play was the money was supposed to reach Northern Beef. Of the $600,000 extra that Benda approved, $550,000 did make it to Northern Beef. The extra $550,000 amount exactly matched the $550,000 amount that Northern Beef diverted to SDRC Inc. to pay the salary for Benda and other expenses for two years. State Attorney General Marty Jackley disclosed in July of this year that he was prepared to arrest Benda and convene a grand jury on the $550,000 diversion as well as three double-billings for airline travel by Benda while in his state job. If Rounds had indeed approved the $600,000 of increases, that would have made him part of the plot to steer money from the state Future Fund through Northern Beef to SDRC Inc. to pay for Benda’s post-government job at SDRC Inc. All of this happened in the closing weeks of Rounds’ final term as governor during December 2010 and the first days of January 2011 before Dennis Daugaard took the oath as governor. Jackley said he had email proof that Benda arranged his job with SDRC Inc. in December 2010. Northern Beef opened for less than a year, shut down mid-2013 and filed for bankruptcy. At the time of his death one year ago, Benda had just started a new job with Heartland Consumers Power District at Madison. Meanwhile Daugaard’s replacement for Benda, Pat Costello, terminated the state contract with SDRC Inc. in September 2013. Not until after Benda’s death did any of the financial maneuvers come to public attention. The one missing piece is whether anyone who worked with Benda or in the Rounds administration has definitive knowledge of whether Benda acted on his own in approving the $600,000 of increases. The Argus Leader, by the way, did later change its story regarding the $600,000 on its web site.